Correlation Between NEW MILLENNIUM and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both NEW MILLENNIUM and FAST RETAIL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining NEW MILLENNIUM and FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEW MILLENNIUM IRON and FAST RETAIL ADR, you can compare the effects of market volatilities on NEW MILLENNIUM and FAST RETAIL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in NEW MILLENNIUM with a short position of FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and FAST RETAIL.
Diversification Opportunities for NEW MILLENNIUM and FAST RETAIL
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NEW and FAST is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR and NEW MILLENNIUM is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on NEW MILLENNIUM IRON are associated (or correlated) with FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of NEW MILLENNIUM i.e., NEW MILLENNIUM and FAST RETAIL go up and down completely randomly.
Pair Corralation between NEW MILLENNIUM and FAST RETAIL
Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to generate 0.9 times more return on investment than FAST RETAIL. However, NEW MILLENNIUM IRON is 1.11 times less risky than FAST RETAIL. It trades about 0.29 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about -0.23 per unit of risk. If you would invest 735.00 in NEW MILLENNIUM IRON on October 16, 2024 and sell it today you would earn a total of 70.00 from holding NEW MILLENNIUM IRON or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEW MILLENNIUM IRON vs. FAST RETAIL ADR
Performance |
| Timeline |
| NEW MILLENNIUM IRON |
| FAST RETAIL ADR |
NEW MILLENNIUM and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEW MILLENNIUM and FAST RETAIL
The main advantage of trading using opposite NEW MILLENNIUM and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEW MILLENNIUM position performs unexpectedly, FAST RETAIL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| NEW MILLENNIUM vs. Cardinal Health | NEW MILLENNIUM vs. National Health Investors | NEW MILLENNIUM vs. Delta Air Lines | NEW MILLENNIUM vs. EPSILON HEALTHCARE LTD |
| FAST RETAIL vs. Fevertree Drinks PLC | FAST RETAIL vs. United Breweries Co | FAST RETAIL vs. NEW MILLENNIUM IRON | FAST RETAIL vs. Molson Coors Beverage |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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